The Global Smaller Companies Trust moved more or less in line with its benchmark over the 12 months ended 30 April 2023, returning -2.9% to the benchmark’s -2.1%. The benchmark changed on 1 May 2023 but for the period under review it was 30% Numis UK Smaller Companies (ex investment companies) and 70% MSCI All Country World (ex UK) Small Cap. The weightings are now 20:80.
Discount widening meant that shareholders ended up with a return of -6.2%. Starting the period at 9.6%, the discount reached 14.1% at the end of October 2022 and closed the financial year at 12.7%, significantly wider than the board’s sub 5% target. 24.6m shares which represented 4.5% of the starting share capital were repurchased across some 196 trading days, enhancing the NAV by 0.4% in the process.
The dividend was upped by 25%, marking the 53rd annual increase in the dividend and reflecting a 28.6% uplift in revenue per share. However, we should point out that this is not a yield stock – the dividend yield at close of play last night was 1.3%.
Drivers of returns
The table above shows how the trust’s regional portfolios performed in the year compared with the relevant local smaller company indices. Relative to the local small cap market returns, the trust was a little behind in North America (but this followed a good year in 2021/22) and during the second half of 2022/23, the portfolio outperformed significantly after having had a more difficult period last summer. The portfolio was more meaningfully behind in the UK and Europe as stock selection proved challenging. The best returns by far came from holdings in Japan, where the trust’s largest fund holding managed by Eastspring performed very well. In the Rest of World portfolio of collective funds, relative returns were good in Asia, which accounts for most of the exposure in this part of the portfolio.
GSCT : Global Smaller Companies delivers hefty dividend increase